The Philippine Water Revolving Fund Quarterly Report October – December 2009

The program's strategic objective is to improve urban environmental management, with a focus on water supply and sanitation (WSS) sector reform. The PWRF Support Program is a four-year project, with the first year focused on setting up and operationalizing the PWRF credit facility in the Development Bank of the Philippines (DBP). The program's initial phase was extended due to delays in the availability of a JICA loan to DBP. The loan was anticipated in March 2007 but was not signed until September 2008. As a result, USAID decided to extend Phase 1 to March 2009 and exercise the option years. The decision to continue the assistance was based on the desire to sustain momentum in financing reforms, favorable response from the private financing institution (PFI) market, and growing interest from Philippine development partners to pursue reforms in the sector. The Year 3 work plan installed the PWRF program in DBP, provided technical assistance to enable local government units (LGUs) and water districts (WDs) to develop a pipeline of bankable projects, and started developing a long-term financing mechanism for water supply and sanitation projects. The Year 4 work plan maintained key components of the PWRF Support Program but adjusted program activities to account for constraints and current developments in the operating environment. The target market for PWRF shifted to private water service providers, and the team focused on institutional and capacity building of water service providers and the National Water Resources Board (NWRB). The quarterly report for October 1 – December 30, 2009, highlights the status of deliverables and activities of the first quarter of the Year 4 work plan. The report focuses on three components: PWRF set-up and institutional development, project development, and policy and institutional strengthening. In the PWRF set-up and institutional development component, the team assisted DBP in strategizing the implementation of the marketing campaign for PWRF, conducted PWRF marketing events, and provided on-demand project evaluation and transaction support during loan negotiation and implementation. The team also delivered printed marketing materials for PWRF and conducted the first PWRF marketing road show in Cagayan de Oro City. In the project development component, the team evaluated the level of preparedness of project feasibility studies, assisted targeted utilities in improving project feasibility studies for financing from the PWRF, and continued assistance to the Metro Cebu Water District (MCWD), South Cotabato Provincial Water District (SPCWD), and Zamboanga City Water District (ZCWD) in the implementation of septage management projects. The team also conducted workshops to disseminate the septage management business model for water districts, provided help desk support to water districts preparing septage management plans, and developed sanitation strategies/projects for 10 large LGUs. In the policy and institutional strengthening component, the team prepared a rationalization implementation plan for public resource allocation for water supply and sanitation projects, developed a long-term financing mechanism for the sector, and organized and conducted meetings and consultations on rationalization of public resources for WSS. The team also provided technical support to facilitate the Department of Finance (DOF) endorsement of requests for incentives for water sector financing and provided technical secretariat support to the Philippine Development Forum (PDF) sub-working group for water.